Spending response to cash transfers to shield households from inflation: evidence from bank accounts

Aspachs, Oriol; Graziano, Alberto; Mestres, Josep Maria, 1959-; Montalvo, Jose G.; Reynal-Querol, Marta

doi:http://dx.doi.org/10.1016/j.econlet.2024.111684

Spending response to cash transfers to shield households from inflation: evidence from bank accounts

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Aspachs O, Graziano A, Mestres J, Montalvo JG, Reynal-Querol M. Spending response to cash transfers to shield households from inflation: evidence from bank accounts. Economics letters. 2024 May;238:111684. DOI: 10.1016/j.econlet.2024.111684

Abstract

We use daily data from a large Spanish financial institution to analyze the spending responses to a one-off cash transfer to mitigate the impact of the surge in inflation during the 2022-2023 period. Using a staggered difference-in-differences estimator robust to treatment effect heterogeneity, we find that most of the expenditure is concentrated around the date of the transfer and that the average marginal propensity to spend is around 30%. The results are robust to changes in the main specification.